First OXXO store opens in Brazil

Date : 15 December 2020

Oliver Butterworth

Retail Analyst

Femsa Comercio operates over 19,000 OXXO convenience stores across Mexico, Chile, Colombia, and Peru, making it the largest grocery store chain in Latin America. On December 1, Grupo Nós, a joint venture between Raízen and Femsa Comercio, opened the first OXXO convenience store in Brazil.

Source: Raízen

OXXO stores are 100sq. m (on average). Femsa’s strategy for the banner was to open stores in locations that are close to the customer and to offer a varied assortment of products at fair prices.

Pilot store opens in Campinas

Brazil’s first store opened in the centre of Campinas, a city in the state of São Paulo. It is scheduled to open 24-hours; however, this is currently restricted by state rules in response to the COVID-19 pandemic.

The assortment consists of snacks, drinks, cleaning products, personal hygiene, fruits and vegetables, meat, and pet food. There is a selection of food-for-now options, including sandwiches, pizzas, and ready meals. Bread is baked fresh on-site, which will be a key footfall driver. The range is perfectly optimised for transient and on-the-move customers, as well as local residents looking to perform top-up shops.

Source: Raízen

Expansion plans

Grupo Nós aims to open 15 stores by March 2021, with five expected to open before the end of 2020. Most of these are currently under construction. Outside of Campinas, the business plans to open stores in Jundiaí and Sorocaba (both in the state of São Paulo).

Raízen also operates Shell service stations in Brazil, and Grupo Nós is expanding Shell Select (forecourt convenience stores), using Femsa’s experience of building small stores at pace. The business said it plans to open 500 stores in the next three years, across both OXXO and Shell Select.

In November 2020, Grupo Nós opened a 7,000sq. m distribution centre (in Cajamar, São Paulo), which it said will support its operations until March 2022.

Local competition

The proximity channel is underdeveloped in Brazil, but Rodrigo Patuzzo (executive president of Grupo Nós) said it is a market with “great potential”. OXXO will compete with GPA, which operates the Minuto Pão de Açúcar (86 stores in its Q3 results) and Mini Extra (153) banners, as well as Carrefour Express (123).

Our view

OXXO Brazil will be an interesting retailer to watch. In Mexico, Femsa opened over 1,300 stores per year in last few consecutive years, which shows its potential for rapid growth. OXXO’s expansion has been more subdued elsewhere in Latin America. However, this time it can leverage Raízen’s knowledge of the Brazilian market, which will be invaluable in establishing its value proposition.